Once profit is maximized at the output level where MR = MC, profit can be calculated by subtracting the ATC from price and multiplying the result by the quantity produced.

Question

Quizplus · Accepted Answer

Profit per unit is calculated by subtracting average total cost (ATC) from the price (P) at which the product is sold. The total profit is then found by multiplying this profit per unit by the quantity (Q) of the product sold, which aligns with the formula: Profit = (P - ATC) * Q. This calculation is relevant after determining the profit-maximizing output level where marginal revenue (MR) equals marginal cost (MC).

Once Profit Is Maximized at the Output Level Where MR